Modi Govt. readies Rs 14,000 crore subsidy on hybrid & electric cars

Following countries such as UK, China, Germany and some states in the US and Canada, announcing subsidies and tax benefits to promote hybrid and electric cars, the new Modi Government has also planned similar subsidies. A proposal to this effect has been sent by the Heavy Industries Ministry to the Finance Ministry and is expected to cost the exchequer INR 14,000 crores.

This subsidy proposed by the Government on purchase of electric and hybrid cars will be a percentage of difference taking into account price of car running on fossil fuel and an electric car. This is being done to reduce pollution and oil consumption and steer buyers towards buying a hybrid or electric car.

The use of hybrid and electric cars has been a topic of debate. While allies argue that these cars will go a long way in reducing pollution and oil consumption, opponents are of the opinion that the use of these vehicles are faced with technological challenges, high costs and limited affordability leading to its lower than expected demand.

With just a few models being offered in India such as the Toyota Prius, Camry and Mahindra e2o the Government proposes 35% max subsidy for pure electric vehicles like Mahindra Reva e2o and Nissan Leaf, and maximum 25% subsidy on hybrid cars that can travel a minimum distance of 15 kms on a single charge.

This subsidy will be routed through auto companies and will go a long way in bringing prices of these cars to more affordable levels. This proposal is yet to be put to the cabinet for its approval though no timeline as to when this subsidy scheme will come into effect was indicated.